Bloomberg analyst James Seyffart cites Morgan Stanley's 0.25% fee MSBT as key factor in Truth Social's ETF pull; DWAC vote next.
Truth Social has withdrawn its application for a crypto-focused ETF, a move that surprised some market observers. The filing, submitted to the Securities and Exchange Commission, was pulled without a public explanation. The withdrawal comes as the ETF landscape grows more crowded, with issuers competing on fees and structure.
James Seyffart, an ETF analyst at Bloomberg Intelligence, questioned the reasoning behind the exit. He suggested that rising competition likely played a role, specifically pointing to Morgan Stanley's low-fee MSBT product as a potential factor. The MSBT fund, which launched recently, charges a 0.25% expense ratio, undercutting many existing crypto ETFs. Seyffart argued that Truth Social may have concluded it could not compete effectively in a market where fees are compressing and first-mover advantages have already been claimed.
Truth Social, the social media platform linked to former President Donald Trump, had filed for the ETF through a partnership with an unnamed asset manager. The product was designed to track a basket of crypto-related equities and futures, not direct cryptocurrency holdings. That structure would have placed it in a crowded field alongside products from ProShares, Valkyrie, and VanEck.
The withdrawal does not affect Truth Social's core operations. The company remains focused on its social media platform and the planned merger with Digital World Acquisition Corp. (DWAC). The ETF pullback signals a retreat from financial product expansion. The timeline for any potential refiling is unclear, and the company has not indicated whether it will pursue a different crypto strategy.
The withdrawal affects no existing ETF tickers, as Truth Social's product never launched. The decision adds to a pattern of crypto ETF filings being pulled or delayed with regulatory uncertainty and fee compression persisting. The SEC has not approved a spot Bitcoin ETF, though it has allowed futures-based products. That regulatory gap has made the crypto ETF space a battleground for issuers trying to differentiate on cost, structure, or brand.
Morgan Stanley's MSBT is one of the cheapest crypto-linked ETFs on the market, and its success has pressured smaller issuers. Truth Social's withdrawal suggests that brand recognition alone may not be enough to overcome the cost and complexity of launching a competitive crypto ETF. The Alpha Score for Morgan Stanley stands at 53/100, labeled Mixed, reflecting its balanced positioning in the financials sector. For more details, see the MS stock page.
The risk of further ETF withdrawals would decrease if the SEC provides clearer guidance on spot crypto ETFs or if fee compression stabilizes. A more predictable regulatory environment would allow smaller issuers to plan without fear of sudden rule changes. For Truth Social specifically, a pivot to a niche product, such as a thematic crypto ETF focused on AI or payments, could differentiate it from low-cost competitors.
The situation worsens if the SEC maintains its current stance on spot ETFs, forcing issuers to compete solely on fees. That dynamic favors large asset managers with scale, like BlackRock and Fidelity, and could push out smaller entrants entirely. For Truth Social, a failed ETF attempt could also dent investor confidence in its broader financial ambitions, especially as it seeks to complete its merger and generate revenue from its platform.
The next concrete catalyst for Truth Social is the DWAC merger vote, expected in the coming months. A successful merger would give the company access to capital markets and a public listing, potentially reviving its appetite for financial product launches. Until then, the ETF withdrawal stands as a cautionary tale about the difficulty of entering a market where fee pressure and regulatory uncertainty are the dominant forces. For broader context on crypto market dynamics, see our crypto market analysis.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.